Study on Brand Building in Clusters to Improve Competitiveness of MSMEs - FMC

“Brand Building in Clusters to Improve Competitiveness of MSMEs”
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Acknowledgement
Foundation for MSME Clusters (FMC) wishes to express its gratitude to ICC Division of SIDBI for
providing us with a prestigious opportunity to work on the policy study on “Brand Building in Clusters
to Improve Competitiveness of MSMEs”. The team is thankful for the support that it received from Dr.
R.K. Singh, DGM, Mr. Dev Kumar, Manager and Mr. Ashim Baidya, Asst. Manager of SIDBI who
encouraged and guided the entire process of conceptualization and planning of the study through
strategic advice. Our special thanks to Mr. Ajay Kumar Kapoor, CGM, Mr Anand Prakash Srivastaav,
DGM and Mr. Rajesh Khandelwal, Manager of SIDBI for their valued inputs on the findings of the
study and their support to produce the report.
We place on record, our sincere gratitude to all the key stakeholders, especially the BMO
representatives from various clusters in India and from various other countries for their support in
getting information from the clusters. Our special thanks to Mr Fabio Ruso and Ms Daniela Lazzo of
UNIDO, Vienna for their constant support and inputs in getting right information for international
case studies.
The study within FMC was coordinated by Ms Sangeeta Agasty under the guidance of Mr. Mukesh
Gulati, the Executive Director of FMC. This study would not have been possible without constant
support, valuable inputs and able guidance from Mr. Gulati. Analysis of international case studies
and potential national cases was done by a team of high calibre cluster experts comprising Mr. ASK
Sharma, Mr. Vibhas Mandal, Dr. Debnirmalya Gangopadhyay, Ms Pooja Khare, Mr. Sagnik Lahiri, Mr.
Sourav Gargav, Mr. S. Venkatramanan, Mr. S. Thyagarajan, Mr. Viswanathan and Ms Sangeeta
Agasty. Our special thanks to all these experts for supplying right information for the study. We are
also grateful to the Marketing and Branding Expert Mr. Abhay Ekbote and Senior Cluster Expert and
Director of FMC, Dr. Tamal Sarkar for their valuable inputs and needful support in the study. The
team would also like to thank Mr. Amit Tyagi, Mr. Rahul Bhalla and Mr. Atul Mishra for their
administrative support for the study.
We sincerely believe that this report serves the purpose that it intended to. The document has not
been formally edited. The authors bear all responsibility for the facts presented, errors and omissions
as well as value judgments passed, if any and the views expressed does not necessarily be the views
of either FMC or SIDBI.
Ms. Sangeeta Agasty, Project Coordinator
Foundation for MSME Clusters, New Delhi

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List of Abbreviations
ABICALCADOS Brazilian Association of Shoe Manufacturers
ABRAMEQ Brazilian Association of Machinery and Equipment Sectors Leather,
Footwear and Related Products
AICSUL Tannery Industries Association of Rio Grande do Sul
AOV Valenzano Goldsmith Association
APPEAL Apparel Exporters‟ Association of Ludhiana
ASSOPIASTRELLE National Association of Tile Manufacturers
ASSINTECAL The Brazilian Association of Companies of Components for Leather,
Footwear
BDS Business Development Services
BDSP Business Development Service Provider
BHELSIA BHEL Small and Medium Industries Association
BMO Business Membership Organisation
BPO Business Process Outsourcing
CBE Community Based Enterprises
CCIAA Chamber of Commerce
CCP Communist Party of China
CFC Common Facility Centre
COTEX Consortium of Textile Exporters
CST Central Sales Tax
DCC Danish Competition Council
DKK Danish Krone
DKMA Danish Medicines Agency
EU European Union
EUR Euro
FMC Foundation for MSME Clusters
FY Financial Year
GDP Gross Domestic Product
GI Geographical Indicator

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GPP Good Pharmacy Practice
HAP Hotel Association of Puri
I International
ICE National Trade Association
ICT Information Communication Technology
IEPI Ecuadorian Institute of Intellectual Property
ILO International Labour Organisation
ISO International Organization for Standardization
IT Information Technology
ITES IT enabled services
ITO International Trade Organisation
ITPL International Tech Park Ltd.
KAMAL Knitwear and Apparel Manufacturers Association of Ludhiana
L Local
MoU Memorandum of Understanding
MSME Micro Small and Medium Enterprises
N National
NASSCOM National Association of Software and Service Companies
NDTV New Delhi Television Limited
NITEE Network of ICT Entrepreneurs and Enterprises
OPC OTOP Product Champion
OTC Over-the-Counter
OTOP One Tambon One Product
PDO Protected Denomination Origin
PEM Personal Electronic Medication Profile
POM Prescription-Only-Medicines
R&D Research and Development
RMB Renminbi
SIDBI Small Industries Development Bank of India
SME Small and Medium Enterprise
SPV Special Purpose Vehicle

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STAS Treviso Sportswear Society
STPI Software Technology Parks of India
SWOT Strength Weakness Opportunity Threat
TAO Tambons Administrative Organizations
TFP Talegaon Floriculture Park
TISI Thai Standards Institute
TV Television
UK United Kingdom
UN United Nation
UNIDO United Nations Industrial Development Organisation
US Untied States
U.S.A United States of America
USD United States Dollar
USP Unique Selling Proposition
WIPO World Intellectual Property Organization
WTO World Trade Organisation

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Table of Contents
1. Introduction.........................................................................................................................................................................................11
1.1) MSME Clusters......................................................................................................................................................................17
1.2) Cluster Based Branding-The Context...........................................................................................................................18
2. Methodology of the Study...............................................................................................................................................................19
2.1) Identification of International Branding Cases.......................................................................................................19
2.2) Identification of National Branding Cases ................................................................................................................20
2.3) Methodology for the Study...............................................................................................................................................24
3. Brief Summary of the Sample Selected .....................................................................................................................................28
3.1) International Cases.............................................................................................................................................................28
3.2) National Cases ......................................................................................................................................................................31
4. Learning from International Cases ............................................................................................................................................33
4.1) Developing Branding Strategy.......................................................................................................................................33
4.4.1) Understanding the USP..................................................................................................................................................33
4.1.2) Market Segmentation, Targeting and Positioning .............................................................................................34
4.1.3) Modifying Product Line as per Market Demand..................................................................................................34
4.1.4) Vertical Integration, Subcontracting and Efficient Division of Work .........................................................35
4.1.5) Integration of Production to Marketing.................................................................................................................35
4.1.6) Product Differentiation through Continuous Innovation ................................................................................36
4.1.7) Product Mix........................................................................................................................................................................36
4.2) Role of Business Membership Organisations (BMOs)............................................................................................38
4.3) Clusters Attracting Global Brands...............................................................................................................................40
4.4) Role of Policy.........................................................................................................................................................................41
4.4.1) Creating and Promoting Brand..................................................................................................................................41
4.2.2) Regulatory Measures......................................................................................................................................................42
4.4.3) Brand Enforcement.........................................................................................................................................................43
4.4.4) Creating Favourable Infrastructure and Support Services.............................................................................44
4.4.4) Soft and Hand Infrastructure......................................................................................................................................45
4.4.5) Brand Endorsement........................................................................................................................................................45
5. Conclusions and Policy Suggestions ...........................................................................................................................................46
5.1 Suggestive Model for Cluster Based Branding...........................................................................................................46
Stage A: Embryonic: ....................................................................................................................................................................48
Stage B: Developing.....................................................................................................................................................................50
Stage C: Established.....................................................................................................................................................................52
Stage D: Matured..........................................................................................................................................................................53
5.2 Analysis of the existing Policies and Schemes for Brand Promotion.................................................................55

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Annex 1: Detailed International Case Studies.............................................................................................................................62
1. Montebelluna Ski Boots Cluster ...................................................................................................................................................63
2. Zhili Children Garment Cluster.....................................................................................................................................................71
3. Panama Hats Cluster........................................................................................................................................................................76
4. San Daniele Ham Cluster................................................................................................................................................................84
5. One Tambon One Product (OTOP), Thailand..........................................................................................................................92
6. Udine Furniture Cluster ..................................................................................................................................................................99
7. Valenza Po Jewelry Cluster .........................................................................................................................................................108
8. Sassuolo Ceramic Tiles Cluster..................................................................................................................................................114
9. Sinos Valley Footwear Cluster...................................................................................................................................................119
10. Danish Pharma Cluster..............................................................................................................................................................126
Annex: 2 Detailed National Case Studies ...................................................................................................................................138
1. Pune Floriculture............................................................................................................................................................................139
2. Tiruchirapalli (Trichy) Fabrication Cluster.........................................................................................................................142
3. Ludhiana Knitwear Cluster.........................................................................................................................................................146
4. Ambur Leather Cluster.................................................................................................................................................................151
5. Morbi Ceramic Cluster..................................................................................................................................................................155
6. Kirti Nagar Furniture Cluster....................................................................................................................................................159
7. Delhi ICT Cluster .............................................................................................................................................................................163
8. Bargarh Handloom Cluster.........................................................................................................................................................167
9. Alappuzha Coir Cluster.................................................................................................................................................................171
10. Sanganer Handblock Printing Cluster.................................................................................................................................174
11. Puri Tourism Cluster...................................................................................................................................................................178
Annex-3: Action plan for Cluster Branding...............................................................................................................................183
Annex-4: References ..........................................................................................................................................................................185

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Executive Summary
Silicon Valley IT cluster of US, San Daniele Ham cluster of Italy, Sinos Valley Footwear
cluster of Brazil and many more such known global names confirm that cluster reputation
can lead to cluster branding through appropriate branding strategy. Such branding helps
clusters gain international visibility, attract global partners, encourage investments, attract
skilled professionals and gain the attention of policy makers. Research works at global level
have also observed that brand building is strongly related to improved competitiveness of the
cluster enterprises (Cluster Initiatives Green book by Orjan, Goran, Christian 2003; Cluster
Marketing and Branding, Tactics, 2012). Cluster brand can lead to greater recognition of the
cluster, reduced risk of production and innovation, provides driving force and direction for
cluster development. Moreover, it helps reinforce identification, mobilize local pride and
boost self-confidence of cluster actors.
Cluster based or location based branding can support attractiveness and competitiveness of
MSME clusters, and help them grow. Some of the clusters in India have recognized its
importance and using their geographical location as their brand informally but still a formal
cluster specific branding is lacking. Government institutions have also put in lot of efforts in
cluster development and market promotion but not much has been done to brand the
clusters and consequentially create sustainable market linkages. This book, which is an
outcome of an intensive study on cluster based brand building commissioned by SIDBI to
Foundation for MSME Clusters, has analysed ten successful international examples of
cluster based branding and captured the learning those have relevance for Indian clusters.
Those learning were then used to develop cluster based branding model for India. The
methodology for common brand creation and promotion is suggested and the role of policy
and cluster stakeholders for the same is defined.
Outline of the book:
There are five broad sections in the book, followed by annexure on detailed international
case studies and analysis of eleven potential clusters of India where cluster branding can be
implemented. A brief snapshot of these sections is as follows:
Section-1: This section briefly introduces the MSME clusters and its importance. It also
introduces the context and need for cluster based branding.
Section-2: This section explains the methodology of the study. The process of identification
of international branding Cases and also identification of national branding cases has
been captured. Methodology and framework of case analysis has been outlined along with
its justification.
Section-3: A brief summary of the sample cluster selected globally and also from India has
been explained in the section.
Section-4: Learning from international cases were analysed and lessons drawn were
captured in this section.

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Section-5: In this section, conclusions were drawn and policy suggestions were given based
on the learning from international cases and analysis of potential Indian clusters.
As part of the methodology of the study, ten international clusters from various sectors were
selected keeping in view the following four parameters: a) Product category such that all
relevant sectors from Indian perspective are covered; b) International regions such that
lessons did not remain limited to one specific geographical region and have consolidated
learning from different parts of the world; c) Geographical Indicator (G.I) /Non G.I cases as to
have strategic learning from two varieties of clusters and also in order to cover strategies
adopted for brand creation as well as for brand retention after getting G.I recognition; d)
Availability of sufficient material about selected cluster to draw lessons from, for writing a
strong branding case study.
Indian clusters are identified under five broad categories: industrial, handicraft, handloom,
agro products and services. Not all clusters are amenable to branding. So while selecting
clusters, we identified the parameters drawn from the international case studies and tested
the clusters to indentify the potential branding cases. It is believed that the presence of all
these parameters, in any status or form, is a mandatory requirement without which the
“cluster branding” initiative is unlikely to materialize. In addition, the current market scenarios
along with the target markets i.e. national, international or local were also mapped. This
enabled the selection of clusters catering to all market levels. Those parameters are: a)
Uniqueness of Product: The product of the clusters identified must have inimitable, tangible
qualities which the customer will recognize and might be willing to pay a premium price for.
These factors can be product specific, e.g. design in case of products like wood furniture
patterns etc., geographic exclusivity of raw materials used in product, specific manufacturing
processes (in food processing or agro-processing industries), quality of finished products
and ability to produce uniform products in large quantities (in high end manufacturing
industries like auto components or pump and motors) etc.; b) Soft Infrastructure: This
denotes the presence, and the social capital/strength of BMOs in the cluster; c) Hard
Infrastructure: The availability (or at least indications of presence) of cluster level facilities
like common facility centres, technical training institutions, R&D institutes etc denote the
inherent strengths of a cluster and reinforces its ability to be able to achieve the standards
expected of a common brand.
Leaning from the International Case Studies:
Branding is a time intensive exercise which requires systematic planning and collective
actions by a group of likeminded entrepreneurs. It is a cost intensive work which sometimes
requires heavy development push by policy stakeholders. Branding can be organic and also
induced. It can be induced through appropriate policy support. Learning from the
international case studies analysed in this book were used to define the role of policy to
develop and promote cluster based branding for improving competitiveness of MSMEs.
Some of the learning are captured as follows.
It is essential to understand Unique Selling Proposition (USP) of cluster product for making
right marketing and branding strategy. Targeted marketing is often considered to be better
than mass marketing especially when the products are specialized products. To understand
the target markets, it is essential to segment the entire market and find out the potential ones
where there are comparatively higher business possibilities. Clusters that have segmented

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their market and taken up right marketing and branding strategy could successfully establish
their marketing channels and build a brand image.
In free market economics, most production decisions are guided by customers need. To
sustain in the market, it is essential for a business to understand the demand of the
customers thoroughly and offer products that suit their need. Outsourcing of the (non-core)
supplementary activities which involve lesser skills or low level of productions to smaller
units and focusing on only high value added process work has proved to be a successful
strategy in some of the international cases. Integrated production and marketing system
plays an important role when units cater largely to local and regional markets.
A major critical factor for the success of the cluster brand experienced in many successful
clusters has been the ability to differentiate its product from other similar product categories
and product lines in the market. Clusters focused on creating a product line as per market
need through creation of various mechanisms to forecast market demand were successful in
creating brand image for themselves. While product specialization plays an important role in
industrial/ intermediary product marketing, product mix serves as key attribute for consumer
product marketing. Clusters that are primarily producing consumer products should focus
more on varieties in terms of product designs, sizes, colours, etc. Such product mix
becomes even important for service sector especially for promoting tourism where product is
defined as the experience the tourists take away from the place.
As the initiative towards branding of the cluster as an entity must be realized, primarily from
within the cluster the presence of strong associations/ networks or in other words known as
Business Membership Organisation (BMO) is an imperative parameter and also is an
indicator of how receptive a clusters stakeholders are towards branding as a marketing
initiative. A common platform, common vision of stakeholder, common entity makes the
branding process more effective and sustainable. It also helps enforcing the brand through
legalised system and creating effective promotional measures.
Many a times, existence of known brands of manufacturing companies or trading firms
makes the cluster known in the global market. This not only creates brand name for the
cluster but also become known as trusted source of products. This has been proved to be a
success factor in some of the clusters.
It is observed in most of the cases that, branded clusters are no accidents. They are a result
of thoughtful and imaginative planning and also creation of right atmosphere. From the
successful branded clusters, it is learnt that policy can play a significant role in promoting
cluster based brands through 1) Creating and promoting brand; 2) By using various
regulatory measures; and 3) By brand enforcement; 4) Creating Favourable Infrastructure
and Support Services (both soft and hard infrastructures); and 5) Brand Endorsement
Based on the learning form successful international cases and analysis of potential national
clusters, policy suggestions were given on creating and promoting appropriate cluster based
brand in India.
Suggestive Branding Model and Role of Policy:
The suggestive model in this book categorizes the stages of development for a brand,
identifies how to measure progress in every stage, and prescribes the marketing priorities for

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moving a brand to a higher stage of development. The framework considers only those
clusters that are ready for branding or branding has already been initiated. The readiness of
branding can be seen through the branding enablers in the cluster. At the beginning,
enablers could be known through nature of the product, critical mass of production, USP of
the product, existing marketing channels, significance, growth potential, likelihood of
presence of social capital, etc. Out of more than 6400 MSME clusters in India, the possibility
of branding may be possible in only those 500-600 clusters where these enablers are
apparent. The model does not go into basic productivity enhancement but focuses only on
branding of cluster products that have the identifiable market potential but not harnessed
well enough.
Broadly four stages of branding can be seen, each equating to a different priority/ strategy,
starting with creating basic awareness, marketing channels and concluding with building
customer loyalty in terms of establishing it as a preferred brand.
Status/
Impact
 Informal Reputation,
but no formal brand
 Minimum standards/
conditions for cluster
product either do not
exist or defined or are
not respected by
manufacturers/
traders
 Consumer recognition
about the uniqueness
of the cluster product
 Reputation converted
into a brand
 Brand naming done
 Standards for naming
brand are well defined,
understood and
respected &
implemented by many
leading manufacturers/
retailers individually or
through their groups/
major buyers
 Consumers in general
are not aware about
the brand
 Brand started getting
wider recognition
beyond a few major
buyers and visibility
among consumers at
large
 Production
specification and
quality standard
respected and followed
by the manufacturers
constituting majority of
the cluster production
 Quality standard and
certification in place by
the expanded group(s)
manufacturing majority
of cluster production
 Consumers among the
targeted market are
well aware of the
genuineness of brand
and can differentiate it
with others
 Potential consumers
demand the brand
 Brand established
among consumers
 Potential for new
market exploration
based on brand
strength explored
 New investors
coming to clusters
join the value chain
 More quality
standards, re-
branding of cluster
products, re-
positioning of
products introduced
Need/
Policy
Support
Externally funded project
oriented-development
focus with heavy Push
Experts/ lab testing
authenticity and
identification
Awareness creation
on possibility of
common branding
Manufacturers/
traders/ major buyers
agree to go for
forming cluster brand
and undertake
necessary measures
including standards
formulation/ institution
creation/
strengthening
Externally funded project
oriented-development
focus/ development Push
Naming the brand
Defining standards for
naming the brand
Initiating the same by
leading manufacturers/
retailers individually or
through their groups/
major buyers;
Creating consumer
awareness of the
brand
Undertaking standards
amendment/ rules
reformulation, if
required
Self sustainable (business
case)
However, policy support
still needed for:
Implementation of
production specification
and quality standard by
the manufacturers
constituting majority of
the cluster production.
Quality standard and
certification in place by
the expanded group(s)
manufacturing majority
of cluster production.
Creating consumer
awareness among the
targeted market on the
genuineness of brand
Self sustainable
(business case)
However, policy
support still needed
for:
Brand related
quality standards
followed by all the
participating
members
Attracting new
investors to the
cluster join the
value chain
Implementing more
quality standards,
re-branding of
cluster products, re-
positioning of
products as per
changing marketing
scenario and rapid
expansion of the
market

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A
Embryonic
B
Developing
C
Established
D
Matured
Stage A- Embryonic: At this stage, cluster has informal reputation, but no formal cluster
based brand. Branding enablers in terms of tangible and intangible capital are weak or
absent. Here, MSMEs have basic capacity of production and marketing, but due to problems
like improper segmentation of the market and unclear targeting of appropriate clientele,
customising and packaging the product and services as per market need, reaching out to the
customer through right marketing channels, etc. the cluster is not being able to grow.
Clusters like, Tiruchirapalli fabrication, Delhi ICT, Ludhiana Knitwear, Ambur Footwear, Pune
Floriculture, Sanganer Hand-block Printing, Kirti nagar Furniture cluster, who enjoy wider
recognition and reputation in their existing market, but cluster based branding has not been
initiated. Policy support and stakeholders cooperation can take them to the next level of
branding.
The standard measure for this stage is aided awareness and heavy development push in
terms of identification and recognition of the potential branding clusters which can otherwise
be named as “star clusters”; funding support for need assessment of a common brand; cost
benefit analysis and preparation of road map for the future; product re-positioning
assessment of related requirements for testing, quality, certification, infrastructure
requirements, etc. A systematic rating process can be followed based on the parameters for
branding and such potential branding clusters or star clusters can be identified and endorsed
by the Government. The vehicle to promote cluster based brand need to be created in the
form of common business group of stakeholders and building their capacities to undertake
common marketing and branding initiatives. Creation/strengthening basic business
infrastructure like testing, quality checking, certification, R&D, etc. thus plugging the
bottlenecks; increase popularisation of the cluster products through promotional measures
like buyers sellers meet, trade fair participation, etc. A weakness in this stage implies a basic
brand name creation and can be addressed through advertising and publicity to boost name
recognition.
Stage B- Developing: Once the basic capacity building, awareness creation and
infrastructure problem is addressed, cluster gains some visibility and customers start
identifying the cluster products in a whole range of products available in the market, then the
next logical step becomes creating appropriate measures for common brand; creating and
strengthening common groups; naming the brand and define its standards; creating
awareness on the same both at manufacturers level as well as consumers level; making use
of soft and hard infrastructure. The implication for brands with weakness in this stage is to
create and educate the market about the brand, such as the type of products or services the
brand offers. There are very few clusters in India are likely to be in this stage of
development.
For such clusters, it is essential to identify right marketable product/ product mix, follow legal
processes with respect to formation of a central legal entity (association, consortium, SPV
etc) which will enforce relevant measures to maintain the clusters brand image. While the
short term impact of these initiatives would set the ground for brand building, but the long
term impact will drive the perception and create a brand image for the cluster.

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Stage C-Established: After adequate care on developing and promoting brand image, the
brand should establish itself in the market. This includes a basic trust of the brand as well as
belief in its value proposition. The impact can be seen as increased turnover, significant
market share, repeat orders, market expansion, etc.
Market is not always stable; it changes with the change in purchasing power, fashion and
many other factors that influence taste and preferences of the consumer. Therefore,
branding should not be a onetime affair. It should be a continuous process to keep the image
up in the eyes of its customer. Rebranding and repositioning is more desirable especially
when the product is based on “concept”. Promoting tourism products successfully requires a
concept or context that allows audience to appreciate what the place has to offer to visitors
and therefore it defines the brand image.
Brand infringement is a common problem at this stage of branding. It not only creates
business loss for the cluster but also markets get distorted with low standard cheaper
substitutes. Governments have supported many unique product cluster get G.I.s. However,
these clusters are still facing threats from other near similar substitutes produced with
cheaper quality raw material or advanced machines. Damage in handloom and handicraft
product cluster is even more whose cheaper versions are available through machine made
operations. In some cases strict rules and regulations are available to protect the brand but
their enforcement is week. There is a need to enforce rules on quality check systems,
standards, certification, etc and create awareness of genuineness of handmade products.
Stage D- Matured: Buyers choose a brand that fulfils a promise they desire, but this
credibility is not sufficient alone to drive choice. Customers perceive brands at a functional
and emotional level. The functional has to do with various promises, such as offering value,
having stated quality, or being relevant to business (in case of B2B marketing) or
consumption need (in case of B2C marketing). Matured clusters are those where customers
are attracted to buy the product. In other words they are loyal to the cluster brand and never
go to other cluster products.
A chief goal in the whole exercise for cluster is to position its brand through communications
that stresses attributes that drive purchase intent and should be preferred by the market.
Brand attends the matured stage when market indicates product preference (product
differentiation) and behaves as if satisfied.
To sum it up, there are many facets to brand equity, including awareness, attitude, image,
preference and satisfaction. All of these areas need to be considered in order to craft the
appropriate branding strategy. Different clusters may fall into different stage of development
and therefore appropriate measures need to be taken to take it to the next stage of
development.
The degree of support required by a cluster to establish its brand depends on the types and
level of its branding enablers. An intense analysis of the above four branding stages spells
the clear need for developmental intervention through policy support at stage A and B to
promote cluster branding. Once the ground is ready cluster can take itself off to stage C and
subsequently to stage D. However, policy support is still required at stage C and D, but its
nature changes substantially.

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1. Introduction
1.1) MSME Clusters
Micro, Small and Medium Enterprises are of immense
importance for social and economic development of any country.
In India, MSME sector contributes by around 8 percent 1
to
country‟s GDP, 45 percent to manufacturing sector and 40
percent to India‟s total exports providing employment to about 60
million people in more than 31 million units. 63 per cent (4.7
million) of the 7.45 million MSMEs in India are estimated to be
present in clusters. With an estimated more than 6400 plus
clusters, India has probably has the highest number of clusters in
the world.
Concentration of units in a given geographical location producing
same or similar types of products and facing common
opportunities and threats is called a cluster. Clusters have been
in existence in India for centuries and are known for their
products at the national and international level. These have been
typified as industrial, handloom and handicraft clusters. Clusters
represent the socio-economic heritage of the country where
some of the towns or contiguous group of villages known for a
specific product or a range of complementary products that have
been in existence for decades and centuries. In a typical cluster,
producers often belong to a traditional community, producing the
long-established products for generations. Indeed, many artisan
clusters are centuries old.
The cluster development approach is being followed in various
countries for development and promotion of MSMEs in an
effective manner. With the MSMEs playing such a large part in
the economy of the nation, a host of innovative development
initiatives have been undertaken, with the cluster development
being one of them addressing all aspects relating to productivity
and competitiveness of an industry. Marketing is a key area that
requires to be addressed in MSMEs to help them survive the
onslaught of heavy competition posed by opening up of trade
barriers/ trade liberalization where small & big industries having
price, design and many other advantages are capturing the
markets. Given such a scenario, initiatives in promoting
marketing are imperative for all clusters and for those that have
attained sufficient levels of maturity, the scope of branding will
1
Source: Prime Minister‟s Task Force:
http://www.msme.gov.in/PM_MSME_Task_Force_Jan2010.pdf
Cluster Definitions:
“Clusters are a geographically
proximate group of
interconnected companies and
associated institutions in a
particular field linked by
commonalities and
complementarities. Clusters
encompass a array of linked
industries and other entities
important to competition …
including governmental and other
institutions – such as universities,
standard setting agencies, think
tanks, vocational training
providers and trade associations”
Porter (1998)
“…geographically bounded
concentration of similar, related
or complementary businesses,
with active channels for business
transactions, communications
and dialogue, that share
specialized infrastructure, labour
markets and services, and that
are faced with common
opportunities and threats.”
Rosenfeld (1997)
Regional clustering has been
used to describe industrial
districts of small crafts firms, high
technology centers,
agglomerations of financial and
business service firms in cities,
company towns, and large
branch plants and their supply
chains.” “…clusters at least must
be characterized along relevant
dimensions if appropriate policies
are to be devised … (these
include) …density..breadth
depth…activity base…growth
potential…innovative capacity.”
Enright (1998).
“Cluster can be defined as
concentration of micro, small and
medium enterprises in a given
geographical location producing
same or a similar type of
products or services and these
enterprises face similar type of
opportunities and threats. The
cluster is known by the name of
the product being produced by
principal firms and the place they
are located in.” UNIDO
Definition

18
serve as a unique tool. The creation of cluster brand is extremely pertinent as it can help a
cluster access new, niche and higher end market segments where the products can be sold
at a premium price. Catering to higher quality clientele entails rigorous maintenance of
quality standards of the product. Such a cluster would have better access to public funds for
furthering the development cause by leveraging its brand value and improved public
awareness.
1.2) Cluster Based Branding-The Context
From a marketing point of view, a brand is “a name, term, sign symbol or a combination of
these that identifies the maker or seller of the product” (Philip Kotler). Simply put, a brand is
a promise. By identifying and authenticating a product or service it delivers a pledge of
satisfaction and quality (Walter Landor).
The brand includes some key elements like- a) Visual System: This is the mark, logo,
typographic system, colour palette and imagery; b) Personality: Attributes and Associations;
c) Value Proposition: the unique selling proposition; d) Core values and attributes: The
integration into business and brand strategy, as well as any interaction. However, it is
important to underline that even if the first purpose of a brand is to distinguish one thing from
another, it represents much more than just names or logos. It is a mixture of tangible and
intangible attributes that creates influence and generates value. This value is called
„brand-equity‟ and is based on the extent to which the brand has high loyalty, name
awareness, perceived quality and strong product associations. It permits to create a long-
lasting relationship with the clients, who are often guided by brands during their purchase
decisions.
Primary goal of every business is reaching out to customers and there is no better way to
achieve this than marketing through branding. It has become necessary to brand any
product/ business today because through branding it is easy to convey that the products are
reputable and recognized. It gives a sense of stability and credibility of establishment.
Branding is a way of clearly highlighting what makes the offer different to, and more
desirable than, anyone else‟s. Effective branding elevates a product or organisation from
being just one product amongst many similar products, to become something with a unique
character and promise. It can create an emotional resonance in the minds of customers who
choose products and services using both emotional and pragmatic judgments.
Branding is highly perceived and commonly used tool by large firms to create demand for
their products and get premium prices. Large businesses are often capital and resource rich,
they usually have greater numbers of employees, they can spend more for R&D, design
innovation, advertising on product, etc. and therefore, they enjoy stronger brand recognition.
However, it has lesser applicability to MSMEs who have basic competitiveness and
marketing related issues. But despite this, MSMEs can even compete with big brands
dominated markets by virtue of their own set of advantages with good preparation and
determination and by getting their approach right. Moreover, in order to be an internationally

19
competitive cluster, it is necessary to be able to attract external interest and resources such
as skilled people and capital.
The most important strength/ advantage that can be leveraged, is the agglomeration or
geographical concentrations of these MSMEs. Some of the clusters have recognized its
importance and using their geographical location as their brand informally but still a formal
cluster specific branding is lacking. Government institutions have also put in lot of efforts in
cluster development and market promotion but not much has been done to brand the
clusters and consequentially create sustainable market linkages.
Cluster based or location based branding can support attractiveness and competitiveness of
MSME clusters, and help them grow. Moreover, some of the research works at global level
have (Cluster Initiatives Green book by Orjan, Goran, Christian 2003) observed that brand
building is strongly related to improved competitiveness of the cluster enterprises. Cluster
brand can lead to greater recognition of the cluster, reduced risk of production and
innovation, provides driving force and direction for cluster development. Moreover, it helps
reinforce identification, mobilize local pride and boost self-confidence of cluster actors. At the
same time there is the need to attract the internal actors to join the cluster and to mobilize
around a common vision and strategy. Marketing and branding are therefore key issues for
the long term growth and future competitiveness of clusters. Branding strategies have to be
developed by cluster organisations in order to plan and realize cooperative interventions and
strategic actions, uniting more realities under a unique image.
The present study tries to capture successful international examples of cluster based
branding and capture the learning that have relevance for Indian clusters. Those learning
were used to develop a model or methodology to suggest the role of policy and cluster
stakeholders for brand promotion.
2. Methodology of the Study
2.1) Identification of International Branding Cases
To select ten international benchmark clusters in order to identify the process followed
towards establishment of a cluster brand and lessons learned therein, attempts made to
capture several possible cases across the globe. A list of 73 champion clusters for
branding cases was prepared from different product categories like food product, ICT,
tourism, wood and wood product, ceramic, jewellery, paper and paper products, plastic
product, optics, textile, leather, sports good, handloom, handicraft, ICT, tourism, etc. These
champion clusters were identified through different information sources like- FMC knowledge
bank, Cluster Observatories of India (www.clusterobservatory.in) and Europe
(www.clusterobservatory.eu), WIPO (World Intellectual Property Organization), World Trade
Organisation (WTO), International Labour Organisation (ILO) data base, Geographical
Indicator (GI) registry in different countries, United Nations Industrial Development
Organisation (UNIDO), and also from various web sites and libraries.
These cases were then grouped under sector, country and GI & non-GI categories.
Information about all these 73 identified clusters was collected with a special focus on
branding related information to draw lessons from. Based on the availability of the

20
information and quick analysis of the same, 32 potential cases were drawn keeping in view
the following 4 parameters:
a) Product category such that all relevant sectors from Indian perspective were covered;
b) International regions such that lessons did not remain limited to one specific geographical
region and have consolidated learning from different parts of the world;
c) G.I/Non G.I cases as to have strategic learning from two varieties of clusters and also in
order to cover strategies adopted for brand creation as well as for brand retention after
getting G.I recognition;
d) Availability of sufficient material about selected cluster to draw lessons from, for writing a
strong branding case study.
A second round of detailed literature review was done and also expert views were taken to
select 10 best clusters for detailed case study development. However, the remaining 22
cases were also studied to capture quick learning on branding strategies by cluster
stakeholders and policy.
A framework for writing international case studies was developed and finalized taking inputs
from cluster and marketing experts and also inputs form SIDBI officials. After identification of
the international cases and framework for international as well as national case studies, a
project inception meeting was organised with SIDBI and FMC experts.
2.2) Identification of National Branding Cases
The purpose was to identify ten high potential clusters where cluster branding is
Indian clusters are identified under five
broad categories: industrial, handicraft,
handloom, agro products and services.
Though handicraft has highest number of
clusters in India, but industrial clusters
contribute most significantly towards the
economy of the nation. Hence, of the ten
clusters, 5 clusters were identified from
industrial category. However establishing
a brand for unique traditional industrial
industry is equally important to ensure its
continued sustainable existence and even
more challenging given the average size
of these clusters. Hence one each from
the handicraft, handloom and floriculture
sectors was identified for the study. Again, one each from the service category like tourism
and ICT cluster was also considered in order to arrive at broader understanding of the
prospective processes and challenges associated with the branding of a cluster. The
clusters identified essentially have a unique product that can be offered as a premium brand.
Chart-1

21
The uniqueness of the product of the cluster may be defined in a number of terms like
geographic identity/exclusivity, exceptional quality, uniformity, design etc.
A detailed methodology of how the clusters were identified as high potential has been listed
below with the data of industrial sector as an illustration. The same parameters were then
used for the evaluation of the other sectors as well.
The geographical spread of the clusters was kept in mind and also G.I/ Non G.I recognition
status of the cluster in order to cover all varieties of cases and optimize the learning.
Moreover, while selecting the 10 Indian cases, the 10 international cases for which detailed
case studies were developed were kept in mind so that the learning culled out could be
useful for similar national cases.

22
Chart-2: Industrial Cluster Selection
Process
P
H
A
S
E
I
1
1159 Industrial Clusters
across 14 Sectors
not intervened yet but
have high potential
with GI registration
where Govt. led development
initiatives have been carried
out + +
P
H
A
S
E
II
465 Industrial Clusters out of
120? Products
20% of clusters
from every
sector
Expert Panel
Opinion
P
H
A
S
E
III
2 Clusters/Product
 Local
 National
 International
 Soft Infrastructure
 Hard Infrastructure
 Unique property of product
Final 5 Selected Sample Clusters

23
Selection of industrial clusters:
Step 1: There are a total of 1156 industrial clusters across 14 (of the total 22 industry
groups (or sectors) identified as per the Index of Industrial Production2
) that have been
identified based on the data base available at www.clusterobservatory.in. Out of the 1156
clusters, development initiatives and interventions by the government, either at the state or
the central level has been carried out in 415 clusters till the end of year 2011-12. This
narrows the list of prospective clusters to these 415 clusters as they have been identified for
development initiatives through a judicious process which takes into account its economic
significance, growth potential, likelihood of presence of strong associations etc. which are
believed to be strong enablers of cluster based branding. A quick scan of the remaining
741 clusters was carried out and approximate 50 clusters were further included which were
having potential for branding but no such policy driven development initiatives have been
carried out. This was done so that no cluster of significance was over-looked. In addition to
the above the clusters which are G.I. registered were also taken into consideration as it was
considered that they have already achieved the first level of branding owing to elements of
indigenousness in their products. This resulted in generation of a list of 465 clusters across
120 unique products.
Step 2: In order to obtain a proportionate sample from all the sectors, 20% of top clusters
under each of the 14 sectors were shortlisted. The top clusters were identified based either
on their product (uniqueness) or economic significance which reduces the sample size to 90
clusters. This has ensured equal representation across all sectors. Further, no more than 2
clusters per product were taken into consideration resulting in 75 clusters.
Once again in order to shortlist those products and clusters of highest significance and to not
to over look any, during this short listing process, experts whose areas of expertise lie either
at the product/sector levels or at the regional/state levels were consulted.
Step 3: The clusters were then be tested for the following basic parameters:
1. Uniqueness of Product: The product of the clusters identified must have inimitable,
tangible qualities which the customer will recognize and might be willing to pay a
premium price for. These factors can be product specific, e.g. design in case of products
like wood furniture patterns etc., geographic exclusivity of raw materials used in product,
specific manufacturing processes (in food processing or agro-processing
industries), quality of finished products and ability to produce uniform products in large
quantities (in high end manufacturing industries like auto components or pump and
motors) etc.
2. Soft Infrastructure: This denotes the presence, and the social capital/strength of BMOs3
in the cluster. As the initiative towards branding of the cluster as an entity must be
realised primarily from within the cluster, the presence of strong associations is an
imperative parameter and is an indicator of how receptive clusters stakeholders are
towards branding as a marketing initiative.
2
http://mospi.nic.in/mospi_new/upload/t2_new.pdf
3
BMOs or Business Management Organizations denote any entity within a cluster like informal networks or groups, registered
bodies like associations, consortia, special purpose vehicles etc.

24
3. Hard Infrastructure: The availability (or at least indications of presence) of cluster level
facilities like common facility centres, technical training institutions, R&D institutes etc
denote the inherent strengths of a cluster and reinforces its ability to be able to achieve
the standards expected of a common brand.
The absence of one or more of the above mentioned parameters is tantamount to
elimination of the cluster from the high potential category. It is believed that the presence of
all these parameters mentioned above, in any status or form, is a mandatory requirement
without which the “cluster branding” initiative is unlikely to materialize.
In addition, the current market scenario along with the target markets i.e. national,
international or local was also mapped. This enabled the selection of clusters catering to all
market levels.
Selection of handloom, handicraft, agro based and service clusters
As mentioned previously, the handloom and handicraft clusters were also subjected to a
similar evaluation process. Of the total 563 handloom clusters in India, 122 have been
identified by relevant government departments for interventions and of the 3093 handicraft
clusters, 592 have been identified as sufficiently significant for developmental initiatives. Out
of this one of the champion and potential branding clusters has been identified. Similarly,
one agro based sector namely Floriculture which is most prominent and relevant on the
national spectrum has been identified for the study.
Since there has been no substantial developmental/ schematic work done in service sector,
there were little scope to select the cluster through a systematic selection process.
However, if we will see all potential clusters, Delhi seems to be the location which needs
branding at the national and international level. Other clusters like Bangalore and Hyderabad
ICT clusters are well known cluster brands. Moreover, as the FMC has had sufficient
relevant experience and long term association with this cluster, it was specifically taken
under consideration as there was good possibility of drawing of insights on this relatively
new sector to a larger and deeper extent.
2.3) Methodology for the Study
Detailed framework for international branding case studies and national case analysis was
developed. A team of experts was formed having substantial experience in MSME cluster
development sector and sectoral knowledge. The team was then oriented on the objective of
the project and the frame work for analysing and writing the case studies.
Framework for developing international case study
1) Status of the cluster with its brand value in some quantifiable terms, e.g. existence of
global brands, turnover, number of MSMEs, number of product groups, innovativeness,
leaders and followers, outsourcing percentage of low value addition jobs by the principal
MSMEs, etc.
2) Cluster‟s unique identity
a. Uniqueness of the product

25
b. Uniqueness of the raw material available locally
c. Uniqueness of the skills
d. Unique functional nature of the product in terms of ease of application
e. Uniqueness of the technology/ production process
f. Uniqueness in terms of geographical location/ infrastructure (e.g. proximity to the
market, export infrastructure, etc)
3) Whether cluster brand established naturally (which is otherwise known as informal
reputation (over a period of time) or it was created (formal branding)?
4) Nature of “BRAND”
a. Customer perceives it as a brand but it is not formal/ legalized (The reason for
such perception, which could be because it is a global level highest turnover,
largest exporter, stories abound.)
b. Brand is formal and legalized (e.g. G.I, any other.)
5) If cluster brand was created, then who did it, during which year and for what reason?
Please explain in details
6) Whether pre-branding information on markets, marketing challenges/ future market
scope is available? If yes, please explain pre-branding market scenario
7) Need for branding
8) The process of branding (details with time line)
a. What type of collaboration was established between the firms?
b. How marketable “product” was identified? (If it was done)
c. On obtaining a marketable product, the legal processes followed with respect to
formation of a central legal entity (association, consortium, SPV etc) and how the
relevant measures to maintain the clusters brand image were enforced? (If there
was any)
d. How were the stakeholders motivated? Role played by support stakeholders.
Role played by leader and lead firms. Role played by global sub-contracting. Role
played by being global sub-contractor
e. What favourable ecosystem, policy support, fiscal incentives, if any were there
f. Initiative taken by these groups (Associations/Technical Institutions/CFCs
created) to standardize the product, setting of specifications either at the product
manufacturing level or at legal level for the cluster units to be a part of the
branding initiative; or, specialize/innovate/moving up value chain
g. Development of a business plan and establishment of an executive office to
facilitate the sustainable existence of the legal entity; obtaining of a brand label or
trademark (if any), the processes followed; the successful strategies, the ones
that did not work and how the hurdles were overcome.
h. Visual identity (logo, themes, colors, coordinated image, etc)
i. Marketing strategy (target, messages, time, budget, channels)
9) The implementation of the specifications and standardization initiatives among stake-
holders, the hurdles and resistances faced during this time and the measures taken to
overcome them.
10) The levels of technology prior to the establishment of a brand and needs, if any, to
upgrade in order to produce the standardized products.
11) How market credibility/ loyalty was established? (a) initial trial usage; b) testing
acceptability level; c)develop loyalty quotients
12) What motivated the buyers (Institutional and non-institutional) (Try to get few examples
from different market segments)?

26
13) Outcomes/impacts of branding
a. The establishment of the smooth working operations among the relevant stake
holders associated with the brand, the ability to achieve a continued adherence to
quality norms and the processes like certifications/attestations enforces to
ensure them
b. The increase in market base and sales of the product, willingness of the
consumers to pay premiums price for their product an outcome of branding
c. Business gains to the stakeholders (through national/ international linkages)
d. New products/ additives introduced
e. Impact on the cluster‟ growth and reputation
In the international case the process of branding was the thrust and therefore special
emphasis was given to capture it as per the following suggested steps.
Framework for Analysing National Case
(The objective of the national case analysis was to undertake, a- critical analysis of
marketing and branding related challenges faced by the cluster, b- identify the branding
potential in the cluster (location/ cluster based branding), c- suggest how cluster based
branding can be implemented.
Case Analysis Framework:
1. Products and product groups, current status in terms of product marketability, demand,
existing market channels, brand value in some quantifiable terms, e.g. existence of
global brands, turnover, number of large and medium units, innovativeness of the
Chart-3

27
cluster, followers, outsourcing percentage of low value addition jobs, etc. And if possible
customer perception on products. This brief profile is expected to help identify key areas
to be focused when recommending the branding initiative.
2. Product Uniqueness
• Uniqueness of the raw material available locally
• Uniqueness of the skills
• Uniqueness of the technology/ production process
• Uniqueness in terms of geographical location/ infrastructure (e.g. proximity to
the market, export infrastructure, etc)
• Any other uniqueness?
3. SWOT of the cluster product (w.r.t. its market)
5. Marketing challenges faced by the cluster
6. Branding preparedness
• Production Volume
• How many lead firms
• Product Quality
• Marketing channels
• Relevant Infrastructure
• Presence of R&D/ Institutions
• BMO Strength
• Potential Demand
7. How can cluster based brand be established? (Broad ideas) What could be the possible
steps for the same? How specifications and standardization initiatives among stake-holders
can be established? How can stakeholders be motivated for the same?
8. How can buyers be motivated (Institutional and non-institutional)?
9. Expected outcomes/impacts of branding. (A suggestive list is as follows. However, you
may also like to include the parameters which can describe the expected outcomes)
a. The establishment of the smooth working operations among the relevant stake
holders associated with the brand, the ability to achieve a continued adherence to
quality norms and the processes like certifications/attestations enforces to
ensure them
b. The increase in market base and sales of the product, willingness of the
consumers to pay premiums price for their product an outcome of branding
c. Business gains to the stakeholders (through national/ international linkages)
d. Introduction of new products
e. Impact on the cluster‟s growth and reputation

28
3. Brief Summary of the Sample Selected
3.1) International Cases
Based on the methodology detailed out in the previous section, 10 successful branding
cases which were identified for detailed case study were presented in the following.

29
S.N. Cluster
Name
Country Sector Product No. of
Firms
Associations Market G.I/ Non G.I Type of
Marketi
ng
1 San Daniele
Ham
Italy Food &
Beverages
Ham 31 Consortium of San Daniele Ham cluster N&I G.I B2B
2 OTOP Thailand Multi-
products
Multi Products 7255
tambons
- N&I Non G.I B2C
3 Danish
Pharmacy
Denmark Life Science Pharmaceutical
products
228 Danish Pharmaceutical Association N Non G.I B2B
4 Sinos Valley
Footwear
Brazil Footwear Shoes 480 Trade Associations for: 1) Shoe producers-
(ABICALCADOS), 2)Tanners- (AICSUL),
3) Component producers (ASSINTECAL) 4)
Machinery suppliers (ABRAMEQ) 5)
Component producers (ASSINTECAL) 6)
Export agents (ABAEX)
N&I Non G.I B2B
5 Sassualo
Tiles
Italy Ceramic Tiles 284 National Association of Tile Manufacturers
(Assopiastrelle)
N& I Non G.I B2B
6 Panama Hat Ecuador Hat Straw Hat 500 The Artisans Association of Montecristi L, N & I G.I B2C
and
B2B
7 Valenza Italy Jewellery Jewellery 1300 1) Valenzano goldsmith association
2) Consorzio Del Marchio Divalenza
L,N&I G.I B2B
8 Udine
Furniture
Cluster
Italy Furniture Chair 1200 1) Italian Manufacturers Association
2) National Trade Association (ICE)
L,N& I G.I B2C
and
B2B
9 Zhilli Textiles
Cluster
China Textile Children‟s
Garments
6000 - L,N & I Non G.I B2B
and
B2C
10 Montebelluna
Ski Boots
Cluster
Italy Sports Good Ski Boots 425 Treviso Sportswear Society (STAS) L, N & I Non G.I B2B
and
B2C
*L: Local, N: National, I: International

30
In addition there were another 22 cases as mentioned below in the table, were studied to
draw quick learning.
Name Product Category
1. Parma Cheese, Italy Food and Beverages
2. Jersey Royal Potato, UK Food and Beverages
3. Comte Cheese, France Food and Beverages
4. Coffee of Colombia, Republic of Colombia Food and Beverages
5. Medicon Valley, Denmark Life Science
6. London Tourism, UK Tourism
7. Las Vegas Amusement Cluster, USA Tourism
8. Thailand Tourism Tourism
9. Sialkot Surgical Instruments, Pakistan Life Science
10. Shoe cluster of Guadalajara, Mexico Sports Good
11. Plastic Cluster of Upper Austria, Austria Plastic
12. Tucson Optics Valley, USA Optics
13. Glasswork Cluster of Bresle Valley, France Glass
14. Hamburg Aviation Cluster, Germany Aviation
15. Super National Branding of Baltic Sea Region Multi-products
16. Silicon Saxony, Germany Micro Electronic
17. Paper Province Case of Värmland, Sweden Paper
18. Cluster 55, Denmark ICT
19. Timber Construction Cluster of Estonian, Northern Europe Wood
20. Scotch Cluster, Scotland Food and Beverages
21. Alsace Vineyard, France Food and Beverages
22. Sports Good Cluster of Sialkot, Pakistan Sports Good

31
3.2) National Cases
10 potential branding cases in India which were selected for suggesting branding strategy is
presented in the following map.
Delhi ICT
Cluster
Kirti Nagar
Furniture
Cluster
Ludhiana Hosiery
Cluster
Sanganer Hand
block Printing
Cluster
Morbi Ceramic
Cluster
Puri Tourism
Cluster
Bargarh Ikat
Handloom Cluster
Pune Floriculture
Cluster
Alappuzha Coir
Cluster
Trichy Engineering
and Metallurgy
Cluster
Ambur Footwear
Cluster

32
S.N Cluster Name State Sector Product No. of Firms Associations Market
*
G.I/ Non
G.I
Type of
Marketi
ng
1. Ambur Footwear
Cluster
Tamil Nadu Footwear Footwear Large-12 Medium-
40 Small- 30
I Non G.I B2B &
B2C
2. Bargarh
Handloom Cluster
Orissa Handloom Sarees of tie and
dye, dress
material, lungis
and napkins
100 weavers 1) Maitree Bunakar Sangha, 2) 2)
Gangadhar Meeher Ikat Club, 3)
Sambalpuri Ikat Bunkar Sangh, 4)
Jhilimunda Traditional Weavers Group
L,N&I G.I B2B &
B2C
3. Allapuzha Coir
Cluster
Kerala Coir Coir Mats, Matting
and Carpet
Large- 15, SMEs-
250, Micro- 46,000
L,N&I G.I B2B
4. Sanganer Hand
Block Printing
Cluster
Rajasthan Hand Block
Printing
Sarees, dupattas,
salwar-kameez,
bed cover,
curtains, etc.
MSME- 315 1) Calico Printers Cooperative Society
2) Consortium of Textile Exporters (COTEX)
L,N&I G.I B2B &
B2C
5. Morbi Ceramic
Cluster
Gujarat Ceramic Wall tiles, floor
tiles, vitrified tiles
and sanitary ware
479 Units 1) Gujarat Ceramic Floor Tiles Manufacturers‟
Association, 2) Morbi Sanitary Wares
Manufacturers‟ Association, 3) Morbi Dhuva
Glaze Tiles‟ Association, 4) Vitrified Floor Tiles
Association, 5) Roofing Tiles‟ Association
N&I Non G.I B2B
6. Delhi ICT Cluster Delhi-NCR ICT IT Services and
products
2521 1) National Association of Software and Service
Companies (NASSCOM) 2) Network
of ICT Entrepreneurs and Enterprises (NITEE)
N&I Non G.I B2B
and
B2C
7. Ludhiana Knitwear
Cluster
Punjab Textiles Woollen/blended
knitwear
Medium- 1400
Small-2800 Micro-
9800
1) Apparel Exporters‟ Association of Ludhiana
(APPEAL), 2) Knitwear And Apparel
Manufacturers Association of Ludhiana (KAMAL)
N&I Non G.I B2B
8. Pune Floriculture
Cluster
Maharashtra Floriculture Flowers 6702 ha 1)Talegaon Floriculture Park (TFP) 2)
Maharashtra Co operative Floriculture
Development Society , Pune
N&I Non G.I B2B
9. Tiruchirapalli
Fabrication
Cluster
Tamil Nadu Fabrication Fabrication for
different sectors
400 1) BIDASS, 2) BHELSIA N&I Non G.I B2C
10. Puri Tourism
Cluster
Orissa Tourism Tourism 500 big and small
hotels & 30 tour
operators
1) Hotel Association of Puri (HAP) N&I Non G.I. B2C
(*Note: Here I: International, N: National, L: Local Market)

33
4. Learning from International Cases
4.1) Developing Branding Strategy
4.4.1) Understanding the USP
A Unique Selling Proposition (USP) is what
makes business stand out from the crowd
and tells customers what is special about the
product. It is essential to understand such
USP for making right marketing and branding
strategy. USP can be with respect to the raw
material used in production, technology/
production technique, design, skill, etc.
Though understanding USP is essential for
all categories of clusters, but it is more
specifically essential for the GI based cluster
and because of the unique qualities it stand
unique in the crowd and gets popularity.
Some of the clusters know it very well and
accordingly develop their brands around the
USP.
Panama hats are made from a special straw called toquilla in Spanish, which is native to
Ecuador. This straw is unique because of the oscillating warm, humid climate of the region
ranging between twelve and fifteen degrees Celsius during the winter and twenty and
twenty-two degrees Celsius during the summer, contributes to the quality of the fibres.
Panama hats are strong and attractive straw hats having lightweight construction and natural
breathability which makes them perfect for escaping heat of sun. The rows of weaving are
perfectly straight and so tight that some of the hats look as if they are made of off-white
cotton. These hats are woven so finely that it can hold water, can be folded for storage
without damage, and is flexible enough to pass through a ring. These are certain features
considered to be the USPs of Panama hats around which cluster positioned its product
successfully in the global market and thereby gained popularity.
Similar is the case of San Daniele Ham in Italy, where producers knew that its quality
derived from unique weather condition and unique processing is the USP which separates
San Daniele Ham from any other Ham. The uniqueness of the product lies in its taste which
is because of the local conducive weather. The cluster is situated in such a location where it
receives sweet dry air of Alps from north and salty warm wind of Adriatic Sea from south.
This unique blend of weather provides a perfect condition for pig breeding and processing.
Particularly during the time of processing (where the chunk of meat cutting from pig thigh are
coated with salt and pepper) which takes several months, this mixture of unique weather
helps the meat to remain perfectly tender as too much dryness during the processing period
could have made the meat little harder and on the other hand, too much warm weather and

34
excessive humid conditions would not have allowed the meat to get processed for such a
long duration.
Udine Chair cluster‟s uniqueness is derived from its style of production -characterized by
continuous innovation and more importantly, the designing which have brought in worldwide
recognition. In Udine, Italy craftsmen operate the most sophisticated machinery available to
the wood industry. Thus the sophisticated production systems and new designs bring in a
class of its own, that is not matched by other clusters.
4.1.2) Market Segmentation, Targeting and Positioning
Targeted marketing is often considered to be better than mass marketing especially when
the products are specialized products. To understand the target markets, it is essential to
segment the entire market and find out the potential ones where there are comparatively
higher business possibilities. Segmentation could be behavioural segmentation (based on
the benefits customers want, and how do they use the product), it could be demographic
segmentation (based on ages, races, and ethnic backgrounds of customers), also it could
be geographic segmentation (customers location), etc. Clusters that have segmented their
market and taken up right marketing and branding strategy could successfully establish their
marketing channels and build a brand image.
Such market segmentation based strategy could be seen in Udine Chair cluster. Different
strategies were adopted for different market segments in the cluster. For example for buyers
from European Markets who are quality conscious, the cluster firms catered to markets for
only the premium high quality, innovatively designed wooden furniture to them. They used
the phrase “modern and stylish furniture” to attract customers; for buyers from Asian
Markets who are price sensitive buyers, the firms propagated their less expensive steel
and plywood furniture. In this way they established good brand image in markets like
China, Gulf and India. To target Hospitals and Hotel Segments, the cluster firms started
making orthopaedic chairs with innovative spring mattresses which became instant hit with
hospitality segment. Thus no single brand strategy was evolved for the entire European
markets; instead a carefully well planned market strategy for different end user customer
segment was devised successfully by the Cluster.
4.1.3) Modifying Product Line as per Market Demand
In free market economics, most production decisions are guided by customers need. To
sustain in the market, it is essential for a business to understand the demand of the
customers thoroughly and offer products that suit their need.
The management committee in Udine Chair cluster with the help of Udine University has
taken various initiatives to sensitise the cluster firms about the changing customer demands
and importance of inter firm co-operation for the development of the industry. With
awareness this initiative among the cluster entrepreneurs and their interface with designers
and technical experts they formed a market promotional company called “Promosedia”. The
cluster management committee successfully brought about change in marketing strategy
and focused on producing a selected product lines based on market needs of different

35
market segments. The cluster also redesigned their chairs to suit to the elite European
market demands and thus increased their sales.
Similarly, a major success factor in Montebelluna Ski Boot cluster is its adapting to the
Change in technology for the manufacture of footwear. It quickly adopted to use of lighter
plastic material as basic raw material used for the manufacture of Ski, Motor Biking, Tennis,
Football, Dancing, Mountain Climbing, etc from the costly leather. This made their products
more competitive in the international markets. The process of product diversification and
differentiation thus played a key role in the success of the Cluster marketing and led to a
greater competitiveness amongst the firms.
4.1.4) Vertical Integration, Subcontracting and Efficient Division of Work
To compete on the price front in the international markets, the firms in Montebelluna Ski
Boot cluster outsourced its production activities to eastern European firms where the labour
cost was comparatively lower. Outsourcing of the (non-core) supplementary activities also
meant that they were able to focus more on their core competencies which proved to be an
important differentiating factor for the cluster branding. Moreover, due to the benefits of the
Sabitini law which allowed small firms to import machinery at discounted rates and payable
in instalments, they imported machinery to reduce the cost of production and increase
productivity , and thereby could able to retain market share in the export markets.
During 1920s, the most successful firms of Valenza Po Jewellery cluster shifted their focus
from production to trade, which fostered subcontracting to smaller firms and the
fragmentation of production (the average firm‟s size decreased by one third between the
years 1911 to 1927). Also the political and institutional setting of the district supported the
development of jewellery specialization, entrepreneurial ventures and inter-firm cooperation.
Collective institutions played a key role in the entry of Valenza Po‟s firms, including small
artisans, into global markets and they shaped the competition and coordination among firms.
Vertical integration and efficient work distribution was also seen in Udine Chair cluster,
where there are primarily three types of firms. One, small craft workshops who produce
semi-finished goods or carry out highly specialised work (wood turning, bending, polishing,
carving, varnishing, padding) commissioned by the other local manufacturers. Second,
medium-sized businesses that purchase semi-finished goods and do the final production
(assembling and finishing). Third, small industrial enterprises that carry out almost all of the
production process, except for certain types of work destined for the sub-supply market. This
division of work has played a major role in innovative production, marketing and bringing in a
brand image for the cluster.
4.1.5) Integration of Production to Marketing
Integrated production and marketing system plays an important role when units cater largely
to local and regional markets. Zhili Children Garment cluster in China was able to produce
the low value product as a result of an integrated production and marketing system. Units

36
were operating from three story houses in Zhili town centre that served triple purpose of
living, working and selling. The first floor was a retail outlet the second floor housed the
production unit and the workers used the ground floor as a dwelling unit. The cluster was
able to sell more than 90% of its products locally and in the neighbouring areas directly
without much involvement of the intermediaries. Most of the business was dealt in cash
sales resulting in a lesser transaction cost, thereby making the price of the final product
competitive. It also affected substantial savings in the transportation cost by focusing its
selling efforts locally and in the neighbouring areas.
4.1.6) Product Differentiation through Continuous Innovation
A major critical factor for the success of the Montebelluna Ski Boot cluster was its ability to
differentiate its product from other similar product categories and product lines in the market.
They were able to utilize the extra production capacity to produce innovative and specialized
products rather than restricting themselves to the same kind of products. Moreover, the
cluster focused on creating a product line as per market need. It has also developed
mechanism to forecast market demand and kept itself ready with right kind of products.
Gradually the customers started distinguishing the brand Montbelluna from the other brands
because of its product innovation and trendy offerings.
The cluster was also able to expand into new markets with the help of diversification into
unrelated product categories: from ski shoes to Non Winter Clothing, a part of the Textiles.
They were able to tap the new markets of the European countries, United States and Japan
which enabled them to increase their turnover significantly, especially when the sales of ski
shoes were on the decline.
4.1.7) Product Mix
While product specialization plays an important role in industrial/ intermediary product
marketing, product mix serves as key attribute for consumer product marketing. Clusters
that are primarily producing consumer products should focus more on varieties in terms of
product designs, sizes, colours, etc.
Zhili Children‟s Garment cluster was able to offer a wide range of product mix (more than
500 types of children‟s wear in different sizes) that was available in colours and innovative
designs for children of various age groups. Moreover the cluster also produced products for
different seasons like winter wear, summer wear etc and therefore operates at full capacity.
It ensured that it received a continuous market feedback on the changing market demand
and preferences of the customers and based on these it devised effective ways and means
to forecast designs in advance and produce products accordingly to suit the changing
market trends and thereby was able to effectively compete in the market.
Motebelluna Ski Boot cluster was also quick to understand the changing nature of the
demand for their products and evolution of the market. This market oriented approach of the
cluster played an important role as the cluster was able to change its product mix from

37
Trekking Boots production to New Product Mix of Non-Winter items, the market for which
was experiencing increasing demand. The Cluster was able to successfully shift and expand
into the manufacture of non winter clothing segment as a result of its correct assessment of
the increasing consumer demand for these items.
Product mix becomes important for service sector especially for promoting tourism where
product is defined as the experience the tourists take away from the place. Tourism product
consists of variety of elements which is basically a package that is not integral to each other,
but are complementary and meet the needs of tourists. There are mainly three elements that
tourists look for. These are: 1) place attractiveness; 2) facilities; and 3) ease of reach. A
series of sub products define these elements which are captured in the following chart.
Chart-5
A tourism destination needs a good product portfolio strategy to be able to develop tourism.
The portfolio should be based on the existing attractions and resources, but it should also
take into account the essential infrastructures, facilities and services needed to make the
development come true.
Atrractiveness
Objects & Attractions
(natural, cultural or
man-made such as
festivals or performing
arts, etc)
including the image as
envisioned by tourists
Facilities
Facilities available in
the
destination, including
accommodation, food, p
arking, transportation,
recreation, health, fitne
ss and others.
Ease
The ease to reach these
destinations with
safety, security, cleanlin
ess and hospitality

38
4.2) Role of Business Membership Organisations (BMOs)
As the initiative towards branding of the cluster as an entity must be realized, primarily from
within the cluster the presence of strong
associations/ networks or in other words
known as Business Membership Organisation
(BMO) is an imperative parameter and also is
an indicator of how receptive a clusters
stakeholders are towards branding as a
marketing initiative. A common platform,
common vision of stakeholder, common entity
makes the branding process more effective
and sustainable. It also helps enforcing the
brand through legalised system and creating
effective promotional measures.
Montebelluna Ski boots cluster has been able
to create local systems within the cluster with
the help of „The Club of Italian District‟,
which was established in the year 1994. The
club has played a key role in improving
relation with the decision making centres at
the local and the national levels, provide
linkages with different institutional, economic,
cultural and scientific operators across 28
districts, with a total of 30,000 companies are
part of this club employing over 250 thousand
employees and global turnover of 22 billion
Euros in 2006. Moreover, it was instrumental
in creating a large number of ancillary
industries in the cluster.
Aggressive marketing steps were taken by
the local consortium to promote San Dainele
Ham. (See case study-1) Throughout the 70‟s and 80‟s the consortium started participating
in lot of trade fair all over Europe. This has helped the cluster to create a customer base at a
pan Europe level and also the ham of San Daniele started getting famous among the
European customer. Consortium also relaxed the production cap for high quality producer
and exporters. This encouraged the producers to focus more on quality and increase their
market base beyond Italy and even Europe.
Lobbying was resorted to by the consortium with the regional authorities as well as the
Ministry of Industry of Government of Italy to create a trademark for San Daniele ham and
safeguarding it. There was no trademark for San Daniele Ham till 60‟s. Also there was no
suitable law particularly related to Food processing industry in Italy. The Consortium realized
that if San Daniele Ham needs to grow beyond the local and Italian markets, the product
needs to be safeguarded as there might be compromise in quality standard in order to
Case Study: 1
San Daniele ham
San Daniele ham, a single undifferentiated and a
perishable food product consortium successfully
launched their brand through a well organised and
planned institutional marketing approach to become a
leader in its category of products not only in Italy but also
in European and American markets.
Consortium rightly identified quality and taste as its
Unique Selling Proposition (USP) and developed entire
marketing, distribution and sales promotion strategy
revolving around USP. In a strategic move it got the
approval from the European Union as the Protected
Denomination Origin (PDO) which further helped in
enhancing consumer confidence on its product and
quality. Consortium also established institutional
linkages with local Chamber of Commerce, various
regional level as well as central level Government
authorities, Consortium of Parma Ham Cluster which
helped create an institutional mechanism which
promoted and increased the brand value of the product.
Success of San Daniele Ham will always be considered
as example of how a food product having very little
scope of differentiation was able to leverage its natural
location advantage to its benefit in becoming a brand of
international repute.

39
maintain high production. Realising the threat the consortium wanted to have a trademark for
their product and also lobbied for required changes in the law.
After getting the trademark for San Daniele Ham, consortium became the local
administrative authority for monitoring and reviewing authority of trademark norms. As a
result, cluster could maintain its high standard of quality by keeping close watch on the
producers. After maintaining the high quality standards, the consortium introduced the self
regulatory production cap for the high quality ham producers. This encouraged rest of the
producers to adopt and aim for higher quality standards in their production process. It also
would fetch a higher price in the market for the branded product as a result of limited supply
and high quality product.
A district Committee was formed in Udine Chair cluster that organised “Fair of the Chair”.
This committee was the first common body to develop, launch and promote the cluster
brand. Soon after the success of the fair, the committee then formed a market promotional
entity called “Promosedia” to improve the brand image of the cluster through organising
international exhibitions and facilitating the cluster firms in participation of international trade
fairs. The Management Committee comprised of the representatives of Udine Province,
three Mayors, four entrepreneurs, representatives of Trade Unions and the Presidency of
CCIAA (Chamber of Commerce). The cluster thus accessed all the major organisations of
repute for its support in promotion of its products. It also acted as a coordinator organising
meeting with the designers, importers in the European markets and with the cluster
members and institutions.
Common branding was used as an efficient tool to communicate values at international level
and to keep an effective dialogue with retailers and other partners in Velenza Po Jewellery
cluster. The consortium for the cluster brand (“Consorzio per il Marchio”) was formed and a
common brand named as “DIVALENZA” was created. The DIVALENZA (“Made in Valenza”)
brand aims to promote the originality and superior quality of jewels created by the associated
companies. To bring about brand identity, the brand name was engraved on every object
produced in the cluster. Cluster exploited the perception of high quality amongst the
consumers for Italian products by focusing the brand identity as “Made in Italy”. This
marketing strategy proved to be successful as the brand got established in the international
market and the sales of the cluster increased phenomenally.
The Sinos Valley Footwear cluster in Brazil had six trade associations that represent the
specific interests of a range of activities related to shoe producing and carried out within the
cluster. These associations‟ are-Shoe producers association (ABICALCADOS); Tanners-
(AICSUL); Component producers (ASSINTECAL); Machinery suppliers (ABRAMEQ);
Component producers (ASSINTECAL) and Export agents (ABAEX). The other local support
institutes are Business Association (Novo Hamburgo), Shoe trade fair organisation
(FENAC), Vocational schools (SENAIs), Technology centre (CTCCA) etc. These
associations have also had major contribution in branding and development of the cluster.
They have played an important role in bringing the producers and suppliers on a platform for
exchanging and solving their problems resulting in enhancing their growth. The Sinos Valley
Cluster benefited from the expertise of the members of all these association which were
locally established.

40
4.3) Clusters Attracting Global Brands
Many a times, existence of known brands of
manufacturing companies or trading firms makes
the cluster known in the global market. For
example the Ski Boot cluster of Montebelluna is
famous for because of the existence of biggest
shoe manufacturers of football, cycling, basket
and tennis. Some of the known brands are
Nordica, Tecnica, Salomon for general Ski boots;
Lotto Sport Italia for Trekking shoe; Alpinestar for
Motorcycle shoes; Geox and Stonefly for Walking
shoes, etc. Moreover, known athletics and cross-
country races are based in the country. This not
only creates brand name for the cluster but also
become known as trusted source of products.
(see case study-2)
Similar is the case of Udine Chair cluster in Italy
which has franchises of quite a large number of
international brands. Udine Chair Cluster is
brand of its own, evolved as a truly international
brand. It represents 50 percent of the total
European production of chairs, exports to more
than 60 countries across the globe. It represents
10 percent of the top 1000 branded furniture
manufacturing companies at global level.
Valanza Po Jewellery cluster in Italy houses
Damiani, Bulgari, Pasquale Bruni, Roberto
Legnazzi, Leo Pizzo, Palmiero, Gaspari, Staurino
Particolari Preziosi, Santagostino, and Moraglione, which are some of the major global
brands of the cluster. The cluster is globally known for these big brands.
Case Study-2
International Linkages with local gatekeepers
Contrary to the general belief, the Montebelluna
case shows that the presence of international firms/
brands in a cluster proves to be an advantage to the
cluster as it helps the cluster evolve an open eco
system of local and external linkages and also take
advantage of the product and process innovation.
Montebelluna cluster was successfully able to
establish linkages with international firms and
facilitated for setting up research and development
facilities in the cluster and helped these international
brands to collaborate with the small and medium
firms. Leading international firms like Decethlon,
Eindl, Mephisto, Raiche, Timberland, Fila etc have
developed research and development departments
in the cluster and they also have established
partnerships and collaboration programmes with the
local firms in the area (Belussi and Asheim, 2003).
Montebelluna is a technology cluster having
presence of a number of international firms in the
cluster and together they help in developing the
innovation and production capacities of the cluster.
Such a collaborative approach was helpful in
absorption of external knowledge and technology in
the cluster. Moreover, the entry of multinational
firms, elevated the level of competitiveness among
local firms. While global buyers or foreign investors
may not be likely to transfer managerial and
technological capabilities to local subcontractors
that would elevate them from the status of suppliers
to potential competitors (Bair and Gereffi 2001).

41
4.4) Role of Policy
Branded clusters are no accidents. They are a result of thoughtful and imaginative planning
and also creation of right atmosphere. Policy can play a significant role in promoting cluster
based brands. Following chart followed by clear analysis of cases defines the role of policy
in creating a sustainable cluster based brand.
Chart-6
4.4.1) Creating and Promoting Brand
Under the guidance and support of several local organizations such as the Municipality, the
Province, Chamber of Commerce and foundations of
different banking organisations and with the involvement of
interested cluster stakeholders, the Government of Italy
took an initiative to work out a strategy for the development
of Valenza Jewelry Cluster by creating and popularizing a
common brand name. In 2007, the consortium for the
cluster brand named as “Consorzio per il Marchio” was
created and the name of the brand was given as
“DIVALENZA” which means “Made in Valenza”. The purpose was to position its products as
“Original” and of “Superior Quality” of jewels created by the associated companies. However
success did not happen Overnight. It took AOV, the main Valenzano goldsmith association
and local municipal administration almost 2 years to convince, form and propagate the
common brand. The association with the help of local municipality and bank foundations had
organized several sensitization programs on the importance of collective bargaining and
common branding. Slowly the firms started believing the concept of common marketing and
today there are more than 700 micro firms who are the members of the consortium and
selling their products under the common brand name. The brand logo is engraved on every
Brand Endorsement
Soft and Hard Infrastructure
Creating Favourable Infrastructure and Support Service
Brand Enforcement/ Retension
Regulatory Measures
Creating / Promoting Brand

Study on Brand Building in Clusters to Improve Competitiveness of MSMEs - FMC

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